Third-party payment for psychotherapy: (2) Medical necessity

November 11th, 2013

In my last post I outlined some complexities of third party payment for office psychiatry, and especially for psychotherapy. As my example I used Medicare, the only third party payer I bill. Some of the problems include complex billing (i.e., collecting from multiple parties), partial reimbursement, unrealistic documentation requirements, loss of patient confidentiality, and a misplaced emphasis on medication “evaluation and management” over psychotherapy. There are also challenges specific to dynamic psychotherapy, such as obscuring the transference. But I saved the most fundamental issue for this post: Does third party payment for psychotherapy make sense in general?

This may seem a puzzling question, coming from me. I not only value deeply what psychotherapy offers, I make my living from it. Shouldn’t it go without saying that psychotherapy should be paid for somehow, no matter where the money comes from? My experience with public and private health insurers tells me otherwise.

“Medical necessity” is the linchpin, and frankly the problem. The more a therapeutic encounter fits a medical model and is arguably “necessary” in that framework, the more readily it is covered by health insurance. Psychotherapists of all stripes tiptoe uncomfortably around this issue. Medication management fits the medical model very well, so psychiatrists who incorporate this into their psychotherapy sessions enjoy outsized reimbursement (or their patients do). Talking about anything else, no matter how central to the patient’s presentation, does not fit the medical model nearly as well. Nonetheless, psychotherapists who offer a step-by-step approach aimed concretely at relief of symptoms emulate medical evaluation and treatment much more than those who employ open-ended, exploratory approaches to tackle dysfunctional family dynamics, chronic self-sabotage, and many other concerns for which people seek psychotherapy (and later report benefit; see Consumer Reports, November 1995, Mental health: Does therapy help? pp. 734-739, and this analysis of the Consumer Reports survey by Martin Seligman). Note that the crucial variable for coverage is not what helps more, or relieves more agonizing misery. It’s what seems more “medical.”

Using “medical necessity” as the criterion to treat human misery that often isn’t medical at all leads to much inconsistency and even cruelty. As mentioned in my last post, insurers demand that I code my “procedure” (i.e., the session) depending on what we talked about. If we spend the hour discussing medications, even if this focus can easily be understood as a symbolic, unconscious appeal by the patient for care-taking or some other emotional need, it’s worth far more to the insurer than if we spend the same hour explicitly discussing the patient’s experiences and reactions to actual caretakers. (As added irony, the latter discussion can obviate the former in future sessions, a detail lost on insurers and most everyone else.) Since private insurance partly reimburses many of my non-Medicare patients based on how their sessions are coded, an agitated, marginally employed, chronically suicidal patient with severe personality issues is reimbursed far less over time than a high-functioning, stably-employed patient with a medication obsession. This makes no sense and is blatantly unfair.

The truth is, I’m the same expert — and put bluntly, worth the same amount of money — no matter what I’m discussing with the patient. That is, as long as I have the integrity to focus on the patient’s central issues, not to provide or bill for unneeded services, not to offer hand-waving in lieu of explanation, not to mindlessly prescribe medication after medication, not to casually chat and call it psychotherapy, and so forth. In other words, I need to be a good doctor instead of a sloppy or unethical one. I need to know when to be “medical” and when not to be.

Traditional dynamic psychotherapy fits the medical model especially poorly. It is not primarily focused on symptom relief. The treatment is not tailored to diagnostic categories. It follows no step-by-step sequence. Even expert practitioners often cannot estimate treatment duration. After many decades of published studies the evidence base for treatment efficacy still triggers heated debates. Arguing “medical necessity” for such treatment is at best unnatural, at worst contrived or even misleading. (It’s even more absurd to argue the medical necessity of one specific session in an ongoing treatment; to me, this is like asking whether the 10th note in a piano concerto is “musically necessary.”) Those of us who recognize the value of dynamic work and have seen patients change in important, fundamental ways are kept busy trying to pound this square peg into a round hole. But CBT doesn’t avoid this problem either: it’s more like a square peg with rounded corners.

Faced with the struggle to show medical necessity, it’s tempting to wonder whether psychotherapists should refuse to play this game. However, opting out isn’t easy. Even if I chose not to be a Medicare provider — I admitted my mixed feelings about this last time — self-pay patients with private insurance would still seek maximal reimbursement for seeing me. I can hardly blame them. I see no way out of participating, at least indirectly, in this misapplied standard of medical necessity.

It’s hard enough to assure that all Americans have access to basic health care. Assuring that all have access to mental health care is one step harder, even when that care accrues only to the seriously mentally ill and fits the medical model very well. It will be a very long time indeed before America deems it worthwhile to offer psychotherapy to the so-called worried well: those who have all their faculties but are miserable due to inner conflicts, self-defeating beliefs, or a traumatic past. If that day ever comes, it will be when medical necessity is supplanted by a more fitting standard, one that judges mental distress and its treatment on their own merits, and not by borrowing legitimacy from medicine.

First, I genuinely think that the issue of payment and its value to transference is overrated. I’m perfectly fine with therapists saying that they don’t want to deal with insurance, because it’s a huge hassle for them and that this is part of how they take care of themselves, but it sounds like one of Kipling’s just-so stories when it’s argued that this is for the benefit of the patient.

Moving forward to my main point, how do you think that psychotherapy, if it does not fit the medical model, should be paid for? If your answer is self-pay only, then I have a big problem with that. I think that people struggling from paycheck to paycheck need and benefit from therapy and should not have to pay something like 40% or more of their weekly check to see a therapist. (Let me be clear that I’m not blaming any individual who chooses to opt out.) And look, I’m in psychoanalysis and pay a low fee and have discussed the issue. I’m not saying it’s meaningless, just not the most important thing in the world. And there are people who say the same thing about medical care, that people have a different attitude to it when it’s their money on the line. But I think that high-deductible plans are terribly unfair to the sick or anyone who lost out in life’s lottery. So, it’s really the same problem.

If you look at most chronic medical problems, there’s usually a huge psychosocial component. When I’ve talked to nurse practitioners about these issues, they tend to emphasize, for obvious reasons, what they call the nursing model which is more holistic. There are in MA, some integrated, capitated provider organizations contracting with public payers and providing services to the elderly and those with disabilities who invest a lot in coordinated primary care. That includes addressing behavioral health needs and long-term social supports. This has allowed them to keep a lot of people with sever physical disabilities out of institutions at lower costs. I mean, if you have diabetes and you are depressed you are not taking care of your diabetes. Similarly if your blood sugar is really low, your mental status will be altered. People attending to physical health need to treat the whole person too.

If not through health insurance, how should we pay for psychotherapy, psychosomatic pain management, stress reduction, nutritional counseling and long-term supports that make it possible for people to buy healthy food. Certainly if there were less poverty, that would do a lot to remedy these issues.

But in the world we live in who do you think should pay for psychotherapy?

Hi EastCoaster,
The importance of payment to transference, and the importance of transference itself, varies widely. Today I spent an entire hour discussing with a patient how he feels about Medicare paying for his psychotherapy. He raised the topic, not me, and as far as I recall it was the first time either of us mentioned it. Among other things, we talked about guilt, his own valuation of the therapy, and his concern about my reaction as he confessed his feelings. He agreed with me that similar issues would have arisen much earlier in the treatment were he paying out of pocket.

Does this happen in every treatment? Of course not. But it happens enough that the issue is far from overrated. I guess it’s no surprise that self-interest always sounds sincere, whereas interest in others is often suspect. While it’s true that many psychotherapists, myself included, shun insurance panels partly out of personal preference, this doesn’t preclude also doing so for the benefit of patients — or more precisely, to optimize conditions for a particular type of treatment we feel benefits patients. Contrary to popular belief, self-interest and compassion for others are not mutually exclusive.

How do I think psychotherapy, if it does not fit the medical model, should be paid for? I didn’t answer that directly in my post, although at the end I suggested that someday we may use standards more fitting than medical necessity. What I had in mind was a society compassionate enough to recognize and respond to misery and pain whether it is “medical” or not. Of course, some psychological interventions make good claim to being medical, such as those you cite aimed to improve diabetic control. The current medical standard applies well in such cases. “But in the world we live in” this standard is biased against pervasive non-medical misery and its treatment. While public and private health insurance currently cover a lot of mental health care, I was arguing that they do so using a model that often doesn’t fit well. Thanks for writing.

That’s a good point. He made no mention of it, and there are other reasons I consider it unlikely, e.g., he isn’t the blog-reading type. But the timing coincides, and it’s certainly possible. This nicely illustrates how self-disclosure can complicate transference work. Did I unwittingly provoke my patient by disclosing my own feelings about Medicare? Very hard to say. It would’ve been much easier to know I didn’t if there had been little or no chance my patient knew my actual thoughts on the topic. Then we could say with some certainty that his feelings were coming from him, and were not provoked by me. The degree to which a dynamic psychotherapist or psychoanalyst should be inscrutable — a “blank slate” — is a matter of some debate in the field. It clearly is a matter of degree, as self-revelation at some level is inevitable. Thanks for your comment.

It seems mental health care is widely neglected until those neglecting it find themselves in need of its services. Furthermore, even if all Americans had access to mental health care, it would take much more time and effort to dissipate the cloud of stigma that surrounds the field. This issue won’t be resolved until that occurs, and mental health problems are no longer viewed as signs of weakness, but true medical conditions that warrant treatment.

Insurance companies are so concerned with progress and their bottom line, it seems they couldn’t care less if the treatment is effective or not. I’ve found that in therapy, there is a fine line between being goal oriented and pushing the process unnecessarily. Many people have deep seated issues that take time to confront and heal. Redirecting thought processes and transforming maladaptive behaviors is no small feat. It’s one reason I opted not to have my insurance involved in paying for my psychotherapy. I would much rather have this process be between myself, my therapist, and my psychiatrist than to involve an insurance company which frequently pushes the envelope. By nature, therapy should be goal oriented. Rushing things on the other hand, does a disservice to the patient and drags out a painful psychological process.

Hello Dr,
I am applying to medical school this summer and as of now, am on a strong trajectory toward psychiatry, which I came to from psychology, in hopes of being able to treat the whole patient, mind, brain and body, most effectively. I am a bit hesitant to enter the current delivery model which exalts psychopharm above psychotherapy, and it seems like an uphill battle for drs who do not want to only do 15 minute med-management sessions, but rather really get to know each patient and design comprehensive plans for each. If I 1. have the goal of delivering quality healthcare to people of low income, and would not feel good about a self-pay practice, and 2) want to do in depth, integrative psychiatric therapy, is this a dream that is impossible to make into a reality? Do you have colleagues doing this? Are there any models wherein you have seen quality psychotherapy being delivered to the underclass by well trained psychiatrists as the primary Doctors (ie not the MSW/lmhc for therapy, psychopharm for 15 min med management model? Also, I work at a residential OCD treatment center now, and I hear a fair amount of dr’s who specialize in this area (such as Jeff Schwartz out by you) making the case that in light of the neuroplastic nature of the brain, mindfulness/cbt/psychodynamic-psychotheraputic interventions should be classified as having distinctly “medical” results, almost as a type of pointed and un-invasive brain surgery. Do you think this is a meaningful trend in the field? In other words, do you think psychotherapy by psychiatrists is gaining or losing teeth in regard to being covered as “medical” in the upcoming healthcare climate? Thanks so much! I love your blog, Century of The Self is probably my favorite documentary!

Hi Eric,
Thanks for your comment, which raises a couple of important issues. While I am not aware of any psychiatrists in private practice who voluntarily limit themselves to low-fee patients, some set aside time for pro-bono or low-fee work. My own participation in Medicare is somewhat like this, but one could do it on a cash basis instead (or in addition), and charge as little as zero in selected cases. Also, with the advent of Obamacare, patients with low income and heavily subsidized health coverage may be be seen as any other insured patient. Public mental health clinics, as well as integrated systems like Kaiser, use psychiatrists mainly for medication management, but may allow them a few therapy cases. However, the only setting I can think of in which psychiatrists routinely provide “in depth, integrated psychiatric therapy” to people of low income is training clinics. That is, in training settings, psychiatry residents and clinical psychology interns see patients for low fees, in exchange for serving as training cases. I was medical director of such a clinic for ten years, and was involved in the psychotherapy of many low-fee patients, but only secondarily, as a clinical supervisor. It also occurs to me that things may be different in military or VA medicine, but I have little or no experience in these settings.

Regarding your other question, functional imaging and neuroplasticity have made it faddish to medicalize many disorders and interventions that formerly weren’t seen that way. Mindfulness and psychotherapy are no more “medical” now that these fancy terms are in vogue than they were before. Of course, it may be smart politics to hitch one’s wagon to medicine, and I’m in no position to say whether this is ultimately a good idea. Just speaking for myself, it sounds disingenuous. Mindfulness and psychotherapy should stand on their own, without a tortured effort to force them into a medical model. Remember that neuroplasticity isn’t limited to “interventions,” it applies to life generally. When visiting your grandmother is deemed a medical intervention, then mindfulness training should be too. Before then… I’m not so sure.

I guess that what I was trying to say, however inarticulately, is that a lot of health issues that we think of as medical are not really all that medical. The concept of “health” encompasses so much more than merely the absence of disease.

I agree, “health” does not equal “medical.” A “health necessity” standard would be quite different than our current “medical necessity” standard, and more encompassing of psychotherapy and many other healthful interventions. And then we could start examining necessity, and whether our society ought only to pay for expenses that are necessary for health, versus the larger number that are beneficial. Thanks again for writing.

“And then we could start examining necessity, and whether our society ought only to pay for expenses that are necessary for health, versus the larger number that are beneficial.”

I agree with this, and I think that the “necessity” standard is fraught.

Having said that, what the government or a system of social insurance (which is what healthcare insurance ought to be)will necessarily be limited in some ways.

1.) For example, talking to a pastor at a church may be enormously beneficial to someone’s mental well-being, but a public payor should not be paying the minister’s salary (at least in the U.S.; I won’t tell the UK what to do). Maybe the transportation to get there, though.

2.) Second, there is a point at which something becomes a luxury, and society really can’t be expected to pay for it. If you want to see a therapist who charges $100,000/hr for 20 hours a week, then that’s fine if you’re a billionaire, but we shouldn’t be demanding that society pay for it. And yet, it might be hugely beneficial!

Thanks so much for the reply! That is validating to hear that you and your colleagues are designing a variety of treatment models and payscales. I am not interested in limiting a practice to low-income patients per se, nor high income, basically not limiting it to one income bracket, nor single model of therapy, would be my goal.
Also, in the brain plasticity arena, I’ve heard of certain therapies involving drugs not in direct amelioration of symptoms, but to facilitate extinction, or brain circuit remodeling (D-cycloserine)etc. I also heard of a psychiatrist who used beta blockers and exposure therapy (triggering trauma scripts being read and reread whilst on beta-blockers) to sever the link between the traumatic experience and the adrenal/cortisol system. Designed with the “neurons that fire apart wire apart” dogma in mind. This sort of stuff is more along the lines of what i meant by “un-invasive brain surgery”. What do you think about these sorts of therapies and their role in the future of psychiatry? Legit? Hocus-pocus? This kind of treatment seems exciting and creative to me, and seems a good area wherein psychiatrists can use their prescribing powers in new and interesting ways, linking mind/brain and body and attacking on all fronts.

One of the nice things about psychiatry is the wide range of practice options. I know psychiatrists who are also homeopaths, psychiatrists who treat couples as well as individuals, psychoanalysts who also direct medication services at community mental health clinics, practicing psychiatrists who are also novelists — it’s really up to you. Yes, the field has shifted toward pharmaceuticals and away from psychotherapy in the past 30 years, but that doesn’t dictate how an individual must practice. Just keep your eyes open to the economic and social realities of your choices.

I agree that the novel treatments you cite are exciting and creative, and are good areas for pharmaceutical innovation. They link psychopharmacology and psychology in ways I generally hope our field will progress. I hope they pan out. All the same, I wouldn’t call them non-invasive brain surgery. Time will tell whether we call such combinations of medication and psychotherapy “medical” (if I had to predict, I’d say yes). The word “medical,” like all natural-language words, has fuzzy definitional boundaries. Reasonable people can disagree about examples on the margin despite clear cases of medical interventions and non-medical interventions. This is no fault of the concept or our thinking about it, it’s just the way language works. (The philosopher Wittgenstein had a lot to say about this; his example was defining “chair”.) Thanks again for writing.

I was dx with a conversion disorder secondary to trauma and the primary treatment is psychotherapy. With that diagnosis I have never had an issue getting psychotherapy paid for by insurance. Basically I avoid docs like the plague and will not go unless I have a huge gaping bleeding wound. I average one visit every 4 years. It is very frustrating when a doctor jumps to a conclusion that your issue is caused by conversion disorder rather than an organic cause. Electronic medical records are a difficult issue for people with conversion disorder. If it gets coded in your record you are at risk of it following you around for the rest of your life. If you don’t have a good doctor on your side you risk deceased quality treatment from SOME medical docs and insurance companies. Frustrating, the insurance code that gets your mind healed can effect how the medical business sees the rest of your body.